Intel Atom Drives Record Quarter for Chip Shipments: IDC

The mobile PC chip space, led by Intel's Atom processor, fueled a record for shipments in the third quarter, with a 23 percent jump over the second quarter, according to IDC. The strong quarter was enough to convince IDC to increase its forecast for the year, to more than 300 million units being shipped. However, IDC analysts cautioned that a lot of the growth came from Atom purchases in China, which could slow the momentum if China decides it can't keep buying such high numbers of chips.

Microprocessor shipments surged in the third quarter-driven in large part by mobile PCs-which bodes well for the market going into 2010, according to analysts with IDC.

In a report Nov. 9, IDC said that PC processor units jumped 23 percent compared to the previous quarter-about double the normal season growth between the two quarters-and revenue increased 14 percent from the second quarter, to $7.4 billion.

The shipment numbers set a record for a single quarter, and were slightly higher than in the same quarter last year, which in itself set a record.

"Compared to where the market was at the beginning of 2009, PC processors have come back remarkably strong," IDC analyst Shane Rau said in a statement.

Intel continues to dominate the x86 chip market, according to Mercury Research.

Rau said the sharp increase was enough to convince the analyst firm to raise its expectations for the entire year-to more than 300 million units and a growth rate of 1.5 percent over 2008-but there is some reason for caution as the market enters 2010.

In particular, a lot of growth in the third quarter was fueled by the mobile PC chip market, including systems powered by Intel's Atom mobile chip in netbooks, or what IDC refers to as mini-notebooks. A big market for those systems was China.

"While it's clear our concerns about the second half of the year [regarding the overall chip market] weren't necessary, we're still watching for a -gotcha,' possibly in 1Q10," Rau said in a statement. "The market's growth has been due to shipments of inexpensive Atom processors being sold into markets like China, which is being stimulated by government incentives there. The Chinese market can be very opaque; there are lots of places where inventories can hide. We have to be on the lookout for when China decides it can't consume more processors."

If that happens, it could slow growth, given that the U.S. market is still being hobbled by the struggling housing space and increasing job losses, he said.

In the third quarter, Intel saw its dominance in the overall global chip market grow to 81.1 percent, while rival Advanced Micro Devices' fell by 2 percent, to 18.7 percent.

In the mobile segment, Intel's market share was 88 percent-a 1.1 percent gain-while AMD's dropped .7 percent, to 11.9 percent.

In the PC server/workstation chip space, Intel held a 90.4 percent market share, while AMD earned a 9.6 percent share. In desktop PCs, Intel's share was 72.2 percent, AMD's 27.4 percent.